Segment Reporting

12 Months Ended

Dec. 31, 2022

Segment Reporting [Abstract]

Segment Reporting

15. Segment Reporting

Our determination of reportable business segments considers the strategic operating units under which we make financial decisions, allocate resources and assess performance of our business. Our reportable business segments are retail electricity and retail natural gas. The retail electricity segment consists of electricity sales and transmission to residential and commercial customers. The retail natural gas segment consists of natural gas sales to, and natural gas transportation and distribution for, residential and commercial customers. Corporate and other consists of expenses and assets of the retail electricity and natural gas segments that are managed at a consolidated level such as general and administrative expenses. Asset optimization activities are also included in Corporate and other.

For the years ended December 31, 2022, 2021 and 2020, we recorded asset optimization revenues of $86.7 million, $57.0 million and $24.8 million and asset optimization cost of revenues of $89.0 million, $61.2 million and $25.5 million, respectively, which are presented on a net basis in asset optimization revenues.

We use retail gross margin to assess the performance of our operating segments. We define retail gross margin as gross profit less (i) net asset optimization (expenses) revenues, (ii) net (losses) gains on non-trading derivative instruments, (iii) net current period cash settlements on non-trading derivative instruments, and (iv) gains (losses) from non-recurring events (including non-recurring market volatility).

We deduct net gains (losses) on non-trading derivative instruments, excluding current period cash settlements, from the retail gross margin calculation in order to remove the non-cash impact of net gains and losses on these derivative instruments. We deduct net gains (losses) from non-recurring events (including non-recurring market volatility) to ensure retail gross margin reflects operating performance that is not distorted by non-recurring events or extreme market volatility. Retail gross margin should not be considered an alternative to, or more meaningful than, operating income (loss), as determined in accordance with GAAP.

Below is a reconciliation of retail gross margin to gross profit (in thousands):

	Years Ended December 31,
(in thousands)	2022		2021		2020
Reconciliation of Retail Gross Margin to Gross Profit
Total Revenues	$	460,493	$	393,485	$	554,890
Less:
Retail cost of revenues	357,096		323,219		344,592
Gross Profit	103,397		70,266		210,298
Less:
Net asset optimization expense	(2,322)		(4,243)		(657)
Net, gain (loss) on non-trading derivative instruments	17,305		22,130		(23,439)
Net, cash settlements on non-trading derivative instruments	(35,966)		(15,752)		37,921
Non-recurring event - winter storm Uri	9,565		(64,403)		—
Retail Gross Margin	$	114,815	$	132,534	$	196,473

Financial data for business segments are as follows (in thousands):

Year Ended December 31, 2022
	Retail Electricity		Retail Natural Gas		Corporate and Other		Eliminations		Consolidated
Total Revenues	$	352,750	$	110,065	$	(2,322)	$	—	$	460,493
Retail cost of revenues	275,701		81,395		—		—		357,096
Gross Profit	$	77,049	$	28,670	$	(2,322)	$	—	$	103,397
Less:
Net asset optimization expense	—		—		(2,322)		—		(2,322)
Net, gain on non-trading derivative instruments	11,351		5,954		—		—		17,305
Current period settlements on non-trading derivatives	(26,616)		(9,350)		—		—		(35,966)
Non-recurring event - winter storm Uri	9,565		—		—		—		9,565
Retail gross margin	$	82,749	$	32,066	$	—	$	—	$	114,815
Total Assets	$	1,802,649	$	123,490	$	313,490	$	(1,908,679)	$	330,950
Goodwill	$	117,813	$	2,530	$	—	$	—	$	120,343

Year Ended December 31, 2021
	Retail Electricity		Retail Natural Gas		Corporate and Other		Eliminations		Consolidated
Total Revenues	$	322,594	$	75,134	$	(4,243)	$	—	$	393,485
Retail cost of revenues	284,794		38,425		—		—		323,219
Gross Profit	$	37,800	$	36,709	$	(4,243)	$	—	$	70,266
Less:
Net asset optimization expense	—		—		(4,243)		—		(4,243)
Net, gain on non-trading derivative instruments	19,070		3,060		—		—		22,130
Current period settlements on non-trading derivatives	(12,876)		(2,876)		—		—		(15,752)
Non-recurring event - winter storm Uri	(64,403)		—		—		—		(64,403)
Retail gross margin	$	96,009	$	36,525	$	—	$	—	$	132,534
Total Assets	$	1,527,456	$	7,320	$	310,039	$	(1,491,056)	$	353,759
Goodwill	$	117,813	$	2,530	$	—	$	—	$	120,343

Year Ended December 31, 2020
	Retail Electricity		Retail Natural Gas		Corporate and Other		Eliminations		Consolidated
Total Revenues	$	461,393	$	94,154	$	(657)	$	—	$	554,890
Retail cost of revenues	306,012		38,580		—		—		344,592
Gross Profit	$	155,381	$	55,574	$	(657)	$	—	$	210,298
Less:
Net asset optimization expense	—		—		(657)		—		(657)
Net, Losses on non-trading derivative instruments	(23,242)		(197)		—		—		(23,439)
Current period settlements on non-trading derivatives	35,390		2,531		—		—		37,921
Retail gross margin	$	143,233	$	53,240	$	—	$	—	$	196,473
Total Assets	$	2,906,139	$	941,569	$	317,006	$	(3,799,906)	$	364,808
Goodwill	$	117,813	$	2,530	$	—	$	—	$	120,343

Significant Customers

For each of the years ended December 31, 2022, 2021 and 2020, we did not have any significant customers that individually accounted for more than 10% of our consolidated retail revenue.

Significant Suppliers

For each of the years ended December 31, 2022, 2021 and 2020, we had three, two, and one significant suppliers that individually accounted for more than 10% of our consolidated retail cost of revenues. For each of the years ended December 31, 2022, 2021 and 2020, these suppliers accounted for 61%, 26% and 11% of our consolidated cost of revenue.